Automotive business council, Naamsa, has confirmed it will support the Competition Commission’s guidelines for competition in the South African automotive aftermarket.
Short-term insurer, King Price, has also cautiously welcomed the guidelines, which will become effective from July 1 2021.
The SA Insurance Association (SAIA) has not yet made its stance known on the final guidelines, and the National Automobile Dealers’ Association (Nada) has not commented further since the final guidelines were published in December 2020.
Nada said at the time it believed the guidelines present a positive outcome for consumers and franchise dealers, bearing in mind the document released by the commission “is a guideline that needs to be adopted by the industry as a whole”.
Competition Commissioner Tembinkosi Bonakele said when the guidelines were published they were aimed at removing restrictions imposed by original equipment manufacturers (OEMs) on car owners and on the service providers for service and maintenance as well as replacement parts for their motor vehicles in accordance with international best practices.
One of the big changes is that car owners will no longer have to use dealership service centres and parts departments to keep their service plans and guarantees in place and will have the right to repair or service their vehicles at a provider of their own choice without voiding their warranties.
In addition, insurers must adopt measures to promote a fair allocation of work to repairers on their panels, with a preference for firms owned by historically disadvantaged individuals.
Naamsa CEO Mikel Mabasa said they may not entirely agree with the manner in which the commission has pronounced on some of the key substantive issues contained in the guidelines but “the spirit and the letter of what we should collectively work towards, as part of our transformation journey, are something that Naamsa and the industry support.
“Our commitment towards transformation is well-documented. It is not our intention to act, work or behave in any way that is contradictory to the country’s ambitions on growth, economic development, employment creation and poverty eradication.
“Massive economic inequalities in the distribution of and access to wealth, income, skills and employment, persist. As a consequence, our economy continues to perform below its full potential.
“It is for this reason that we have embraced the guidelines as one of many interventions necessary for us to accelerate our transformation ambitions as adopted in the SA Automotive Masterplan - 2035,” he said.
Mabasa said Naamsa notes with serious concern some of the misinformation and inaccurate narrative peddled by irresponsible individuals and groups. These entities would like consumers to believe that the guidelines are designed to completely overhaul the entire aftermarket ecosystem and that independent service providers will be a solution to bringing down the price of new vehicles in South Africa through the unbundling of value-added services, including maintenance and service plans.
“Progress has been made in undoing the legacy of our past. However, the extent to which this economic success has been shared by all of our people is still inadequate for the requirements of a stable and prospering society.
“The time is right for the introduction of the guidelines to give impetus to our comprehensive and focused strategy towards transformation,” he said.
Wynand van Vuuren, King Price’s partner of client experience, said the guidelines were “good news” in that they would increase consumer choice and facilitate competition and competitive pricing in the market.
Van Vuuren added that this might ultimately lower costs across the board by raising competition and bringing more service providers and repairers into the industry.
“The new code brings a lot of positives to the table. It has the potential to lower claim costs, which will result in lower premiums for the consumer. With more service providers being accredited to work on in-warranty vehicles, we also believe that claims can be finalised a lot quicker with better service delivery from these repairers,” he said.
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